By Paul Rosta, Commercial Property Executive

What’s ahead for retail real estate in 2018? That crucial question was a leading topic of conversation among the estimated 11,000 professionals who attended the International Council of Shopping Centers’ annual New York City Deal Making event last week. During conversations at the site of the convention, Javits Center in Midtown Manhattan, industry veterans offered perspectives as diverse as the retail sector itself.

“This convention has had a very good vibe,” said Anne Mastin, executive vice president for retail at Steiner + Associates, the pioneering owner/developer of town centers. “It could be because the worst of the store closures are behind us.”

Though headlines about those closings have had a negative ripple effect on public and investor perceptions of the retail sector, she pointed to a silver lining. “Ultimately, it’s like pruning a garden, she explained. “I see people being optimistic that they’re getting through some of the problems they’ve had in their chains, and they’re emerging on the other side.”

On the corporate strategy front, some executives reported that they expect to see a trend of public companies taken private next year. “Both from a retailer standpoint and owner-developer standpoint, the privatization of a lot of these (companies) is going to move forward,” predicted Greg Maloney, CEO of retail at JLL, noting the difficulty of running a business under the constant pressure of quarterly earnings. As a case in point, he cited last month’s $14.8 billion offer by Brookfield Property Partners to acquire General Growth Properties.

Veteran observers also discussed the future of the year’s most talked-about retail segment. “The long and short of it is we could see a thousand department stores go dark next year,” said Garrick Brown, director of retail research in the Americas for Cushman & Wakefield. He cited brands like Sears, Dillard’s and Bon-Ton as among those expected to shutter large numbers of stores in 2018.

Malls, too, are in for a major shift, Brown added. During the next 10 years, the number could decline from about 1,150 nationwide to between 800 and 850. “Most of that damage is going to be done from 2019 to 2023,” he predicted. Those closures will bring a decidedly bifurcated impact, as Class B and C malls will encounter much more difficulty backfilling the vacated space than Class A properties.

“The challenges are absolutely real,” said Brown, but he also warned: “People who harp on it too much don’t know what they’re talking about, either.” For example, the Trump Administration’s proposed tax legislation could spur an expanded market for consumer goods. For a precedent, Brown cited the impact of tax cuts during the George W. Bush Administration.

Also on the 2018 radar, said executives, is the continuing restaurant boom. In recent years, the category has expanded its share of the footprint at centers managed by JLL from between 1 and 2 percent to 5 percent, Maloney reports. Meanwhile, a steady stream of online brands moving into brick-and-mortar stores is attracting customers with fresh experiences.

And as a pioneering owner/developer of integrated town centers, Steiner is planning major infill development at properties like Easton Town Center in Columbus, Ohio, Mastin reported. “The biggest thing is densification of the properties with more residential and office,” she said. That’s on top of the 40 or so new retailers who joined the tenant lineup at Easton Town Center this year.